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012 A00AA01 NATIONAL FINANCIAL DATA SERVICES
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 16
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SIGNATURE JOHN E DENNEEN
TITLE SECRETARY
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of
The Royce Capital Fund:
In planning and performing our audits of the financial statements and
financial highlights (hereafter referred to as "financial statements") of The
Royce Capital Fund (consisting of Royce Capital Premier Portfolio, Royce
Capital Micro Cap Portfolio, and Royce Capital Total Return Portfolio)(the
"Fund") for the year ended December 31, 1998, we considered their internal
control, including control activities for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of
Form N-SAR, not to provide assurance on internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, misstatements due to
errors or fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to the risk that
it may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of any
specific internal control component does not reduce to a relatively low level
the risk that misstatements due to errors or fraud in amounts that would be
material in relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls over safeguarding
securities, that we consider to be material weaknesses as defined above as of
December 31, 1998.
This report is intended solely for the information and use of management
and the Trustees of the Fund and the Securities and Exchange Commission.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 1999
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